Proceedings of the Standing Senate Committee on
National Finance

Issue 9 - Evidence - November 30, 2011


OTTAWA, Wednesday, November 30, 2011

The Standing Committee on National Finance met this day at 6:45 p.m. to give consideration to Bill C-13, An Act to implement certain provisions of the 2011 budget as updated on June 6, 2011 and other measures.

Senator Joseph A. Day (Chair) in the chair.

[Translation]

The Chair: This evening, we will continue our consideration of Bill C-13, An Act to implement certain provisions of the 2011 budget as updated on June 6, 2011 and other measures.

[English]

Yesterday, we began our study of Bill C-13 with the appearance of the Honourable Ted Menzies, Minister of State (Finance), who provided us with an overview of the bill. We continued our discussion with departmental officials who took us through the first eight parts of the bill, which senators will have before them. We will begin this evening at Part 9, on page 200 of the bill. The bill is about 650 pages in all, including many schedules at the back that will not require much discussion. We hope to get through the balance of the bill this evening.

[Translation]

I would like to welcome Mr. Maxime Beaupré and Mr. Sebastian Badour. Thank you for appearing. You have the floor.

[English]

Sebastian Badour, Principal Advisor, Policy and Priorities Directorate, Infrastructure Canada: Part 9 is one clause that proposes the $2 billion available each year under the Gas Tax Fund starting in 2014 and 2015.

The Chair: Why 2014?

Mr. Badour: We already have funding until that time, which came from Budget 2007 as part of the Building Canada Plan. We have already signed agreements that reflect that money.

The Chair: The agreements are already signed. It will be $2 billion until that time and then in 2014 it will continue.

Mr. Badour: Yes. There will be new agreements.

The Chair: There will have to be new agreements. Is this indexed?

Mr. Badour: No, it is not.

The Chair: They are the kinds of things we would like you to tell us.

Mr. Badour: It is not indexed. It is $2 billion a year reflecting the budget commitment.

The Chair: Is that $2 billion in today's dollars?

Mr. Badour: Yes, $2 billion.

The Chair: That is $2 billion whenever it is paid out.

Mr. Badour: Yes.

The Chair: How is it determined between provincial, territorial and municipal associations. There are so many different organizations. How is that determined?

Mr. Badour: We try to be comprehensive in the bill in terms of potential recipients. Currently in most provinces and in the territories, it is done through the provinces that then flow the money to municipalities. The exceptions are British Columbia, where the money flows directly to the Union of British Columbia Municipalities, who then distributes to municipalities. In Ontario, most of the money goes through the Association of Municipalities of Ontario. There is also money going directly to the City of Toronto. That reflects the negotiations that took place in 2005.

The terms of the new agreements in 2014 will be the result of the negotiations that will take place.

The Chair: Did I understand you to say that the province gets to keep some of the money to cover the administration of dispensing the money?

Mr. Badour: No. The money flows to the municipalities.

The Chair: Does the federal government ensure that it is shared on some per capita basis? How is that done?

Mr. Badour: There are various formulas. Do you mean between provinces or within a province?

The Chair: Either one or both.

Mr. Badour: Between provinces and territories, the current formula is that the each territory gets $15 million, as does Prince Edward Island. The rest is allocated equal per capita. Within jurisdictions, it varies by province and territory. Sometimes it is straight per capita among the municipalities and other times there is a base amount for every municipality and then the rest is per capita. In other jurisdictions, transit ridership can be taken into account. There are various formulas and they vary by jurisdiction.

The Chair: From the federal government's point of view, First Nations presumably would receive their share directly and not through the provinces.

Mr. Badour: Yes, except in the territories where it would be through the territorial governments. In the provinces, we transfer the money to Aboriginal Affairs and Northern Development Canada, and its First Nations Infrastructure Fund then that flows the money to First Nations.

The Chair: How much of the $2 billion goes to Aboriginal Affairs and Northern Development Canada?

Mr. Badour: Their current allocation is $25 million. I cannot speculate on the amount for 2014 and beyond. The government has not made a decision as to how it will be allocated after that.

The Chair: That is helpful.

Senator Callbeck: I have a question about the formula between the provinces. You said ``the formula right now.'' When will the formula change?

Mr. Badour: It may not change. The government will have to make a decision as 2014 approaches on how the fund will be allocate from that date forward.

Senator Callbeck: You said that Prince Edward Island and the territories each receive $15 million. How is the rest allocated?

Mr. Badour: The rest is strictly on a per capita basis.

Senator Marshall: Could you explain the origin of the $2 billion?

Mr. Badour: In 2005, notionally $2 billion was equivalent to the revenues from 5 cents of the 10 cents a litre federal excise tax on gasoline. That was the genesis of the fund in 2005. There is no formal earmarking, per se. It is notional.

Senator Marshall: That is the amount that has been established. Thank you.

Senator Peterson: You said that this amount is for 2014, 2015 and beyond. How long is beyond?

Mr. Badour: It is permanent.

Senator Peterson: It would be forever.

The Chair: Seeing no other questions, I thank you, Mr. Beaupré and Mr. Badour, for helping us with Part 9. Quite a few points were addressed.

We will move to Part 10, the Canadian Securities Regulation Regime Transition Office Act, on page 200. It looks to be one short clause only.

Mr. Charland, please proceed.

Roger Charland, Senior Chief, Securities Regulation, Intergovernmental Issues and Enforcement, Department of Finance Canada: This is a one-clause amendment. It is simply to provide some flexibility to allocate to the Canadian Securities Regulation Regime Transition Office more than the amount specified in an appropriation act. The purpose of this is simply to provide flexibility.

The Chair: In terms of the $33 million, has that already been used up? All of that $33 million that we initially had agreed upon as parliamentarians has been used?

Mr. Charland: No. According to the securities transition office's annual report, as of March 2011 they have spent about $14 million. I think it is 14 point some odd. It would be spelled out in the report tabled in Parliament on September 19, 2011.

The Chair: How will this work? You are moving it from a statutory amount that has been agreed upon. We are very familiar with estimates; we are just handling Supplementary Estimates (B) at the present time as well. We are quite familiar with that process, but that comes back each year for an amount that should be spent during that year. How does this legislation bring in the annual estimate process?

Mr. Charland: The CSTR, as it is referred to, has been created by legislation. It has a three-year mandate with the possibility of a one-year extension. This is to provide flexibility in the event that it is required to allocate above the $33 million. If there was a need, and if it was required to do so, then there would be a supplementary estimate with an additional amount.

The Chair: That would only happen after the statutory $33 million that has already been approved has been used up?

Mr. Charland: Probably. I am not sure of the decision. I am not too sure whether it would be only after the $33 million or before or during. The provision, as currently worded, sets out 33 or an amount, so there is some flexibility there. I would not want to speculate on exactly how.

The Chair: We, as parliamentarians, should have some understanding as to how this will work.

Mr. Charland: Such amount would be set out in the appropriation act. It is a case of flexibility and only if it is required. At this point in time it is about building the flexibility in order to be able to specify an amount above 33, if needed. If it is not needed, it would not be used.

The Chair: This is a three-year mandate, and how many years of that mandate have taken place thus far?

Mr. Charland: It is closing in, in terms of July with an additional year. I think a year and a half would be its maximum.

The Chair: In the one year then, up until March 31 of 2011, around $14 million was used up, so there is still quite a bit of the $33 million left to be used up before this is necessary?

Mr. Charland: Yes, and that is why it is there, to provide the flexibility. Currently the CSTO is working with willing provinces in order to advance the work. The policy was to provide that flexibility in the event it is needed.

[Translation]

Senator Rivard: For my own information, is the issue of the Canadian Securities Commission the one currently before the Supreme Court? The commission exists, but it being mandatory for all provinces was challenged by the provinces; the issue went to the Supreme Court, and a decision is expected. Is that what we are talking about?

Mr. Charland: The office is a transitional one. It was created in 2009 with a view to preparing a bill and working with the provinces that wanted to participate; so committees were set up to develop a bill and a transaction plan, making the provincial system into a federal one. The office did nothing more than manage and prepare the bill and a transition plan. The bill was sent to the Supreme Court in May 2010, after having been tabled in Parliament for information purposes. We are awaiting a decision. In the meantime, the transitional office continues to work with the participating provinces on the bill.

Senator Rivard: I am under the impression that, if the Supreme Court rules in favour of the government, we will go ahead with a national securities commission, and the operating costs will not be in addition to what is expected.

Mr. Charland: There are two things. The bill tabled proposes a voluntary system. So if the Supreme Court gives the bill the go-ahead, the government's intention is to move forward. It would be an optional, opt-in model, if you like, for those provinces that want to participate. It would establish what is called in English — and I apologize but I cannot remember the French acronym — the Canadian Securities Regulatory Authority which would be a corporate entity that is distinct from the office. So the two are not linked.

[English]

Senator Marshall: My question is somewhat related to the previous one, but our briefing notes talked about the allocation of the additional funds to the transition office. It says at sometime in the future, if and when required.

Is there something specific now that that funding will be used for, or is this just something so the funding will be available for something unforeseen? Is there something unforeseen now?

Mr. Charland: No, this is to provide flexibility. There is nothing foreseen at this point. It is to provide the flexibility as we are moving, or the government is moving forward on this project.

The Chair: The unease is that we have a responsibility to oversee expenditures, and giving flexibility causes us some concern. We do know that, in this particular instance, any further request beyond the $33 million will come to us in the form of estimates.

Mr. Charland: Yes.

The Chair: We have that oversight.

Mr. Charland: Exactly.

Senator Ringuette: Is any part of the $33 million going to be used in regard to the court challenge referred to by Senator Rivard?

Mr. Charland: I am not sure if I understood the question. Are you asking whether these are monies that are being used or were used in the context of the court challenge before the Supreme Court?

Senator Ringuette: Yes.

Mr. Charland: Those are monies that go toward the activity and the operations of the Canadian securities transition office, which are reported in their annual statements and tabled before Parliament. Their latest one, which ended in March 2011, was tabled on September 19. They contain a breakdown of the funds and how they have used them.

Senator Ringuette: This, in no way, is money being used by the federal government in regard to the court challenge?

Mr. Charland: No, this is for the operation of the transition office.

The Chair: Thank you very much, Mr. Charland. You have explained this item, and we are ready to move on to the next section. Thank you.

Part 11 appears at page 201 of Bill C-13. It is entitled ``Wage Earner Protection Program Act.''

Mr. Hodgson, you are back again. Welcome.

Ms. Duff, thank you.

We are interested in knowing what this particular legislation is intended to achieve. If you could go through it and tell us what you are trying to achieve by the legislation, there may be some questions that flow from that.

Lenore Duff, Senior Director, Strategic Policy and Legislative Reform, Human Resources and Skills Development Canada: Part 11 of this enactment expands the Wage Earner Protection Program Act to address a gap in coverage that can occur when an employer attempts to restructure their operations under the Bankruptcy and Insolvency Act or the Companies' Creditors Arrangement Act and it takes longer than six months and then fails, ending in bankruptcy or receivership. As a result, the government is introducing amendments to the Wage Earner Protection Program to extend the period during which wages may be eligible for reimbursement under the WEPP to six months prior to the date of the employer's restructuring proposal or application under the CCAA. The WEPP in its current form provides compensation to eligible workers for unpaid wages, vacation, severance and termination pay earned in the six months preceding the employer's actual bankruptcy or receivership, up to a cap equivalent to four weeks' maximum insurable earnings under EI. That is currently under $3,400.

The Chair: Please explain to us how it happens now. The six months is there now.

Ms. Duff: Right. This effectively moves that trigger back to the first bankruptcy event. That is when an employer enters into a BIA proposal, or under the CCAA, tries to restructure, so it extends that WEPP trigger back to that first date, so that it does not eliminate eligibility for those people. It extends that six months so they will still be eligible, should the company subsequently go bankrupt.

The Chair: If the plan or the proposal does not work, the bankruptcy is triggered. That is the trigger point now, and this legislation is taking it back to when the company makes a proposal.

Ms. Duff: Exactly.

Senator Callbeck: I have a question on the timing. It says that the proposed amendments apply to employers who become bankrupt or enter receivership after June 5. Why is it June 5?

Ms. Duff: That was the date of the budget. It is not retroactive; it is the date of the budget.

The Chair: Would any of our bankruptcy, insolvency or Companies' Creditors Arrangement Act experts like to pose any questions? I think we understand it, and we thank you very much for being here and helping us with that.

[Translation]

Senator Rivard: Could it be said that this bill stems from some soul-searching as a result of what occurred at Nortel and several paper companies, among other things? Could those unfortunate situations have been the inspiration for this government bill?

[English]

Ms. Duff: I think there have been some instances where companies have gone into CCAA protection and subsequently failed.

Nortel is a bit of different situation in as much as they are still in that process. However, there was some concern that we were eliminating some companies that may have gone through that process and subsequently failed, and that hard six-month line was not permitting everybody who should to benefit from the WEPP in a fair way that applies to everyone equally.

Senator Callbeck: I do not understand why that would not be retroactive back to June 5.

Ms. Duff: The trigger being on June 5 was essentially a policy decision. We did not make other parts of the WEPP retroactive as we improved it. I do not have an answer beyond that it was a policy decision taken that it would be effective on the date of the budget as it was introduced in the budget.

Senator Ringuette: It is a recognition that the first phase of the BIA application is the proposal. That is the first phase, and the original legislation did not recognize that first phase and this is the recognition of that first phase. Is that right?

Ms. Duff: This is the recognition of allowing anyone who is affected by a bankruptcy or receivership that was not ultimately successful to be eligible for the WEPP in the same way as those who worked for companies that immediately went into bankruptcy or receivership.

The Chair: The trigger date is on or after June 5.

Ms. Duff: That is right.

The Chair: However, it goes back six months, so that if a company makes a proposal in bankruptcy on June 6, it will go back six months before that for all the wages that might be owed to the employees. Is that right?

Ms. Duff: That is right.

The Chair: To that extent, it goes back before. June 6 is the first date for triggering this.

Ms. Duff: I believe that is correct, if I understand your question.

The Chair: I did not pose it very well, and I do not know if I want to try to do it again.

Ms. Duff: The six-month period ending on the day of the employer's bankruptcy or receivership is what it is now. The period beginning on the day that is six months before the date of a proposal that was filed under Part III, Division I, of the Bankruptcy and Insolvency Act and ending on the date of the employer's bankruptcy or receivership, or the period beginning on the date of the six months before the date that the proceedings were commenced under the Companies' Creditors and Arrangements Act, and ending on the date of the bankruptcy.

The Chair: It is six months before June 5.

Ms. Duff: Yes.

The Chair: I think that is what I was trying to say.

We will now go on to the next section. Thank you, Ms. Duff and Mr. Hodgson.

We are into Part 12, which is at page 202, amendments relating to employment, Canadian Human Rights Act, Canada Labour Code, conflict of interest and coming into force.

Mr. Hill is here. Thank you for joining us. Who would like to tell us about this initiative?

Ms. Duff: It is me again.

The Chair: Ms. Duff, go ahead. You did fine on the last one.

Ms. Duff: This enactment amends the Canadian Human Rights Act to prohibit federally regulated employers from setting a mandatory retirement age, unless there is a bona fide occupational requirement. It also introduces amendments to the Canada Labour Code to remove paragraph 235(2)(b), which denies employees' severance pay upon involuntary termination if they are entitled to public or private pension benefits. Under the Canadian Human Rights Act, unions can exclude, expel or suspend an individual from membership in the organization because that individual has reached the normal age of retirement for individuals working in positions similar to the position of that individual. As well, employers can force an employee to retire upon reaching the normal age of retirement for individuals in similar positions. The proposal under the Canadian Human Rights Act would remove these blanket defences. Under Part III of the Canada Labour Code, employees whose employment is involuntarily terminated are entitled to severance pay. Paragraph 235(2)(b) of the code denies severance pay to those who are also entitled to pensions at that time. The proposed amendment would remove that disentitlement so that age would not indirectly, through pension eligibility, automatically disentitle individuals to severance pay.

The Chair: Is this the legislation that our honourable deputy chair referred to during his speech about removing mandatory retirement ages? He said Senator Banks was not covered, unfortunately.

Ms. Duff: This is the elimination of mandatory retirement for federal jurisdiction employees.

The Chair: Thank you.

Senator Ringuette: I would like to understand the denying of employees' severance pay upon involuntary termination. Can you explain that more? Can you give us an example of what kind of situation that would imply?

Ms. Duff: Under the Canada Labour Code now, if you are laid off and are 60 years old and, therefore, eligible for the Canada Pension Plan, your employer could, under this provision, not pay you severance pay. You would be disentitled to severance pay under the legislation. If the person working beside you was laid off at 59, they would be entitled to their full provision of severance pay. The Canada Labour Code had a provision that said that anyone who, at the time of layoff, is entitled to a public or private pension plan, would not be entitled to severance pay. This eliminates that. It went hand-in-hand with a mandatory retirement provision, so it is going at the same time.

Senator Ringuette: Do you have a definition for ``involuntary termination,'' a set of precedents or something like that?

Ms. Duff: ``Involuntary termination'' is not specifically defined in the code, but ``just cause,'' which is used as the proxy for that, is.

The Chair: In the Canada Labour Code, is there an exclusion for federally employed judges or military judges?

Ms. Duff: The Canada Labour Code does not apply to judges or military judges.

The Chair: One of our senators pointed out that in this piece of legislation mandatory retirement age is being removed, while, in another piece of legislation with respect to military judges, before the Senate at the same time, a mandatory retirement age is being imposed.

Ms. Duff: There are exceptions in some provincial legislation for judges. That is not an uncommon provision, but it does not relate to this.

Senator Peterson: What is severance? What do you get?

Ms. Duff: In the federal jurisdiction, you get two days per year of service or five days, whichever is more. It is two days pay per year of service, or five days if that is greater.

Senator Peterson: Is that always followed?

Ms. Duff: That is a legislative requirement, but there can be collective agreements that negotiate better provisions, which would be followed.

Senator Peterson: Some could be much higher?

Ms. Duff: That is correct, but not through legislation, through collective agreements.

Senator Runciman: Have we dealt with clause 168 of the Conflict of Interest Act? Does that fall under this as well?

Ms. Duff: That is for Mr. Hill.

Senator Runciman: Mr. Hill, could you talk a bit about that, the implications of that and the way it would work? We saw an example with respect to a surgeon. Could you talk about a number of other professions that could fall under this? If you are a lawyer, for example, is pro bono work the sort of thing you are talking about? Perhaps you could elaborate.

Patrick Hill, Assistant Director, Legal Operations, Privy Council Office: Section 15 of the Conflict of Interest Act has a prohibition on a reporting public office-holder engaging in any employment or in the practice of a profession. That is an absolute bar; it does not turn on whether or not there is any conflict of interest or potential conflict of interest. This provision provides a very tailored exception to that prohibition that would permit an incumbent, serving reporting public- office holder to engage in employment or the practice of a profession for the limited purpose of maintaining professional qualifications.

There are a few conditions on that. There has to be prior approval by the Conflict of Interest and Ethics Commissioner and the professional activity has to be unremunerated.

One example we had considered was of a physician who has to maintain accreditation at a hospital, or who, for professional accreditation with the relevant college of physicians and surgeons, has to, over the course of a year, perform so many procedures. Someone who has a trade may be required, as part of the trade requirements, to maintain a proficiency. Section 15, as drafted, would preclude any form of activity, whether remunerated or not. This is quite a discreet carve out.

Senator Runciman: As long as it does not have a relationship to the portfolio you are responsible for. Is that part of this as well?

Mr. Hill: That is why the Ethics Commissioner retains discretion. It would be within the discretion of the Ethics Commissioner to determine whether or not the proposed activity would constitute a direct or potential conflict with the public duties. If so, it would presumably be decided not to permit the activity in question.

Senator Runciman: It is a great initiative. Thanks.

Senator Ringuette: You are saying that there is room within this section for the discretion of the Ethics Commissioner.

Mr. Hill: That is correct.

Senator Ringuette: Because this is under the Conflict of Interest Act, one would suppose that there were issues to do with the act that brought forth this legislation. I have never seen legislation brought forth without an event triggering the requirement for it. What event has triggered this legislation?

Mr. Hill: I am not aware of a specific event. I know the commissioner has been consulted on this provision. She would be in a better position than I to explain how often section 15, as currently drafted, has precluded incumbent reporting public office-holders from engaging in those activities necessary to maintain qualifications. I cannot speak to what she would know. Most of what she would learn, by way of reporting or requests from public office-holders, is a matter held in confidence between the reporting public office-holder and the commissioner.

Senator Ringuette: Chair, only the commissioner will be able to answer that question for us. I hope that the commissioner will be called as a witness.

The Chair: We had not planned on it. Is there anything you can do to help us with this? This is the second day we have had government officials here, and we have to get to the public who are impacted by this legislation.

Mr. Hill: This is not a direct response to the question, but it might be helpful. We looked at the provincial regimes, all of which have a similar exemption. Under nine of the ten provincial regimes, there is a provision, albeit worded somewhat differently in each case, that allows the relevant officer under the provincial regime, be it the Ethics Commissioner or another officer, to permit unremunerated employment where, in the opinion of the commissioner or relevant official, it does not conflict with the duties of the public office-holder and is necessary for the maintenance of credentials. Some of those exemptions are even broader. The federal regime, as drafted, is much stricter than any of the provincial regimes, in having a blanket bar on outside activities, without any discretion or criteria that would permit a public office-holder to engage in other work.

Senator Ringuette: I understand what you are saying and that you may not have the knowledge to answer my question. However, there must have been an event that triggered this legislation, and I am curious to know what it is.

The Chair: We will ask our researchers to see if they can find out anything, and the steering committee will speak to you about this.

Senator Ringuette: Okay.

The Chair: Thank you, Ms. Duff, Mr. Hodgson and Mr. Hill.

Now we will go on page 203, Part 13, Judges Act.

Judith Bellis, General Counsel and Director, Judicial Affairs, Courts and Tribunal Policy, Department of Justice Canada: I am the Director of Judicial Affairs at the Department of Justice.

This amendment increases the number of salaries that may be paid under the Judges Act to from two to four, to permit the appointment of two additional judges to the Nunavut Court of Justice. The amendment is being undertaken in response to a request made by the senior judge of the Nunavut Court of Justice — that is effectively the Chief Justice, the managing judge to the Minister of Justice — in July of 2010.

His proposal seeking two additional judges made particular reference to the rising rates of serious violent crime in Nunavut, as well as the geographic and cultural issues that were sadly placing significant demands on the justice system in Nunavut, and in particular on the Court of Justice.

The current court complement has not been able to keep up with the growing case loads, which has resulted in significant backlogs and delays in criminal matters and all matters before the court. This is a single level trial court. Therefore not only serious criminal matters but all matters — including family-related and civil matters — are heard by this court.

Criminal matters and family matters, which include child protection matters, are affected by this backlog. In terms of the justice system's capacity to respond broadly to the social and legal issues in Nunavut, the backlog in the court was an increasingly serious issue.

In the months following the receipt of the submission, a Department of Justice official worked with the senior judge, officials of his court, the Nunavut government, and colleagues in the Public Prosecution Service of Canada to identify and gather the information that was necessary to establish the court's needs. The addition of even a single superior court judge to a court is a costly matter. A judge costs — depending on whether you use cash or accrual costs — somewhere in the range of $350,000 to $410,000 a year. Increasing the complement of any court does require the Minister of Justice to be able to demonstrate to Parliament that the need is there in order to have a significant draw on the public purse.

As a result, the Minister of Justice seeks significant objective indicators of need. The role of the collective group that I have referred to is to provide that information and make it available to Parliament as they consider the creation of these new positions.

The indicators that were looked at in some depth included trial scheduling delays, case inventories, the volume of criminal charges, the growth of remand populations and the wait times for summary and indictable offences. As honourable senators will appreciate — except for the most pressing of child protection matters — serious criminal matters are the matters that take precedence. These were critical sets of information that was necessary. The court, the chief judge and officials in Nunavut cooperated fully in providing the extensive information.

The court's proposal included information relating to the regional considerations that impact judicial resource needs in Nunavut. It is a completely unique context in this respect. I am sure senators are aware that most of Nunavut's population of approximately 33,000 reside in small communities scattered across a vast territory of 2 million square kilometres. Consequently the Nunavut court's travel time to those communities, often in a context of difficult weather, creates a particularly high demand on the court's time just to get there, let alone to dispose of matters. It is much higher than any other superior court in Canada, including the other two territories. That was a compelling aspect of information and data. At the end of the day, the government's analysis of the various objective indicators allowed the Minister of Justice to conclude and recommend that the court requires two additional judges — probably a minimum of two additional judges — to assist in meeting its workload pressures.

The funding for the appointments was approved in the budget, but the amendments are required in order to establish the statutory basis to allow for those judges to be appointed. In essence, that is why we are here.

The Chair: That is very helpful.

I have a couple of questions for clarification. There is a Chief Justice. If passed, this will increase the number of judges that work with the Chief Justice to four?

Ms. Bellis: The current complement is four including the senior judge, and this will increase it by two.

The Chair: It will be a senior judge, plus six? Secondly, the Court of Appeal?

Ms. Bellis: No, plus five. The senior judge is one of the six.

The Court of Appeal for Nunavut is comprised of the Alberta Court of Appeal and members from the southern courts. As with the other territorial courts it is not a dedicated Court of Appeal for the particular territory, but rather comprises experienced members of the Alberta Court of Appeal plus other appeal court judges. Often they have been identified as both having an interest and experience in northern justice matters. The context in the northern territories has a unique aspect because of both the geographical and demographic realities of those territories.

The Chair: I have a number of senators who will be interested in further clarification.

Senator Runciman: I am intrigued by this. Is this the only court level in Nunavut?

Ms. Bellis: That is correct. It is the only single level trial court, which is how we refer to it. When the territory of Nunavut was created the various actors involved in the creation — including the governments of Yukon and the Northwest Territories when it was established — saw there would be value in not having a two-tier system. They would rather have concentration and efficiencies of a single court that would deal with all matters in a jurisdiction of a relatively small population.

Senator Runciman: That is a fulsome answer.

Are justices of the peace serving there?

Ms. Bellis: There are justices of the peace.

Senator Runciman: Are they not having an impact on remand populations for example?

Ms. Bellis: I am not in a position to speak in a very detailed way to the use of the justices of the peace, but they are a pivotal element in the system.

Senator Runciman: It seems to me that it might be a challenge in terms of recruitment and retention in that area, but maybe it is not. What are you doing now? I know the appointment of a superior court judge takes time. If you are having the problem now, why are you not sending in relief people to get rid of the case load?

Ms. Bellis: That is an excellent question, senator. One of the ways in which the court has been coping to date is by reliance on deputy judges to supplement the capacity of the resident judges.

The senior judge will admit that that has historically been an important source of assistance. There are two aspects to the difficulty with reliance on the deputy judges: First, the deputy judges are appointed from the superior courts in the South. While they are extremely able and obviously willing, they have to step up to the plate to go north. Typically, they go for just a week at a time and would not have the kind of experience with or exposure to the challenges in Nunavut, in particular the area of criminal law and justice.

Second, you referred to the single level trial court. Deputy judges from the south have only half of the procedural experience with criminal matters that resident Nunavut judges have because resident Nunavut judges deal with everything from summary conviction to the most serious crimes. Of course, Superior Court judges who go north typically have experience with indictable offences of the highest kind.

It is that aspect as well as the sense of the government, the people and the resident judges in Nunavut that they have expressed that while the southern judges make a huge contribution, frankly they are not as efficient in dealing with some matters. A serious criminal matter will usually take many weeks, so the contribution of the southern judges is limited to what they can do in one week or less.

Senator Stratton: What is the life expectancy of a judge in the North? That has to be a pretty onerous assignment.

Ms. Bellis: Senator Stratton, the senior judge will tell you, and it was part of why his case was so compelling, that with four judges they are barely keeping up. He says that if one of his judges becomes ill, then his court is at the tipping point. He was not being alarmist in the extreme, so you can imagine with the travel, the isolation and the impact on health, the capacity of resident judges was becoming a matter of significant concern to him.

Senator Peterson: Where will the two judges be located?

Ms. Bellis: All of the judges live in Iqaluit, senator, and travel out from Iqaluit.

Senator Peterson: Who provides the physical structure for the judges?

Ms. Bellis: The Territory of Nunavut. In our constitutional shared responsibility for the superior courts, the federal government pays the salaries and benefits, and the territories and provinces establish the positions and are responsible for all of the costs of administration, including courtrooms other support required.

Senator Nancy Ruth: I want to ask questions about money. The bill says that the four other judges will receive $232,300 each. In my notes, it says that the cost of each new judge will be $327,000. Why is that?

Ms. Bellis: It is the vagaries of the way that the Judges Act is amended. It is a very good question but I cannot admit to have the answer. Could I offer to provide the explanation? There is a good one. I can never get it to stick, so I am sorry. I was not expecting the question.

Senator Nancy Ruth: Is this the normal rate for a judge in the North?

Ms. Bellis: Superior Court judges are paid the same salary regardless of where they live.

Senator Nancy Ruth: It does not include a northern allowance.

Ms. Bellis: This does not include a northern allowance, which they receive in addition.

Senator Nancy Ruth: I look forward to your answer.

Senator Callbeck: You said that more judges are needed because of the backlog. Can you give us any idea of the time frame of the backlog?

Ms. Bellis: I am sorry, senator, I did not bring the specific details of that. Certainly, I can provide it to you.

One of the interesting things about the Nunavut context is that while most criminal courts in Canada are driven by the idea of the Askov time frame, which refers to the Supreme Court of Canada's decision that matters have to be considered within a reasonable period of time or they will be disposed of. In Nunavut, because there is, among other problems, a deficit in defence lawyers, often some of the delays are the result of the lack of capacity in the defence bar. The backlog has been growing and if I recall correctly, it was starting to reach the tipping point, which is around 15 months to actual prosecution.

Certainly, I can get that information. I do not want to mislead you. I will have that information provided tomorrow.

The Chair: I do not have the bill before me. I am still confused about the numbers. The section we are agreeing to amend says ``the four other judges.'' Is there a chief justice and an associate chief justice plus the four judges?

Ms. Bellis: No, there are four judges, including the senior judge. The Judges Act is impossibly complicated and I cannot take responsibility for it. It would take a lot to clarify it. There will be two additional positions established.

The Chair: It is in section 22 of the act.

Ms. Bellis: The fifth position has been established and appointed under what we refer to as the pool position, found in section 24 of the act. It is a general pool of judges from which judges can be appointed to any province or territory in Canada. The authority to pay the sixth judge is found in that provision in section 24. In total, it is six judges, including the senior judge.

The Chair: That is the figure you had given us earlier, and I was trying to square that with this.

Ms. Bellis: If you like, I would be happy to provide a written explanation of these other numbers questions tomorrow.

The Chair: Seeing no other senators wishing to engage in discussion on the Judges Act, we thank you very much, Ms. Bellis, for being here; it was very helpful. Mr. Rodrigue, I am sorry we did not hear from you.

Part 14 is also short and addresses the Nordion and Theratronics Divestiture Authorization Act amendment. There must be a reason for backdating this to 1993. Mr. Marcone is the one to tell us.

Martin Marcone, Legal Counsel, General Legal Services, Department of Finance Canada: This is a technical amendment to the Nordion and Theratronics Divestiture Authorization Act, which is simply intended to correct an oversight that took place some years ago. I can briefly walk you through what happened.

Basically this act, which was enacted in the early 1990s, contains a regulation-making authority, which was to come into force upon the making of an order-in-council by the Governor-in-Council at the time. Unfortunately, that order- in-council was never made. It should have been made in the early 1990s.

Since that time, two regulations were purportedly made under the act. Now the problem is that the related regulation-making authority, in respect of those regulations, was never in force. Essentially what this amendment does is correct the problem by making sure the regulation-making authority was in place at the proper time to ensure the intended operation of the act and the regulations.

The Chair: This is one of those other little items that got picked up along the way, and this seems to be a convenient place to dump it into this basket of an omnibus bill as opposed to a budget implementation bill.

Mr. Marcone: That could be the case, senator. I am unfortunately not in a position to confirm that.

The Chair: When was this discovered and how did we discover this oversight that requires us to amend the act and have it deemed to come into force on April 20, 1993?

Mr. Marcone: I believe it was discovered over the course of the previous year. That particular date that you mentioned is important because it was the date that the regulation-making authority was enacted.

The Chair: Even though the regulations have never been enforced, they were enacted at that time and therefore have you to go back to that time?

Mr. Marcone: That is exactly right.

The Chair: Does everyone understand how this is a budget implementation item?

Senator Callbeck: As a result of this time gap for the coming into force of section 9, would any former employees suffer a loss in terms of pension entitlement? Does that have any effect on them?

Mr. Marcone: My understanding is that, if this is corrected now, that will not happen. That is a major driver behind this, to ensure that employees of these companies and their pensions are not negatively affected in any way.

Senator Peterson: Who is Nordion?

Mr. Marcone: I am not overly familiar with the nature of the company, but at one time it was a company held by the Crown, as was Theratronics. The point of this act was to essentially ensure that the divestiture ran smoothly. Now they are privately owned companies.

Senator Peterson: Is this the Nordion at Chalk River that is now privatized and does the isotopes?

Mr. Marcone: I believe so.

Senator Peterson: These were former federal government employees then?

Mr. Marcone: That is right.

Senator Peterson: When it was privatized, were they not grandfathered? Were they just left out, or the private company did not have to assume responsibility for these people?

Mr. Marcone: They did, but the intention of the regulations that work with the act is to ensure that those employees, under the privatized Nordion and Theratronics, continue to benefit from the pension benefits under the public service superannuation account.

Senator Peterson: This is a clerical error?

Mr. Marcone: Essentially, yes.

The Chair: Thank you, Mr. Marcone. I appreciate you being here to help us understand that interesting clause.

We will now go on to Part 15, Canada Pension Plan, amendments to the act. This one came into force on January 1, 2006, another one of these back-dated ones. I am sure we will get an interesting explanation.

Mr. Cuthbert, Ms. Pichette, Mr. Rodrigue, you are back. You said you would be. Mr. Cuthbert, you have the floor.

Ray Cuthbert, Director, Legislative Policy Directorate, Canada Revenue Agency: The purpose of the proposed amendment is to restore a long-standing position on the treatment of payments to employees out of employer-funded, long-term disability plans that had changed as a result of a Federal Court of Appeal decision in 2010.

This will ensure that employees in receipt of these payments will have pensionable earnings, which had been the case previously. It will result in a harmonization of the treatment of these payments for the purposes of the Employment Insurance Act and the Canada Pension Plan.

Finally, being a retroactive measure, it will ensure that individuals' eligibility to Canada Pension Plan benefits and the amount of those benefits will not be adversely affected.

The Chair: How do we choose January 1, 2006? Was that part of the court case?

Mr. Cuthbert: No, the reason the 2006 date was picked is because that was the refund period employers could ask for. In 2010 they could ask as far back as 2006 to get a refund. That is the reason the date was picked.

Senator Ringuette: Get a refund of what?

Mr. Cuthbert: They could ask for a refund of employer contributions that were made in respect of these payments. If the legislation was not retroactive it would mean these amounts were not pensionable in the past.

Senator Ringuette: Can you very briefly tell us what the court case was?

Mr. Cuthbert: I will try to summarize that for honourable senators. Up until the time of the court decision, I think there had been previous tax court decisions. This is the first case, I believe, that went to the Federal Court of Appeal on a CPP issue.

The judges took a look at the wording of the Canada Pension Plan. The Canada Pension Plan, when it refers to pensionable employment or employment, refers to the performance of services. That work must be done under a contract of service or an employee-employer relationship.

People on long-term disability are not performing services because they are incapable of that. Previous to this decision these amounts would be considered as pensionable, because these people remained employees of the company, they were not terminated. Prior to that, they had been. The court looked at it and said the plain language in the Canada Pension Plan is clear, and it says they must perform services.

In fact, they went further. I think in paragraph 30 of the decision they actually suggested that this matter be looked at by Parliament to resolve the intent of the Canada Pension Plan when it comes to pensionable employment.

Senator Ringuette: In essence we are particularly looking at the CPP disability section?

Mr. Cuthbert: We are actually looking at the general definition in the Canada Pension Plan as to what is pensionable employment. That is found in section 2, which currently defines employment as being the performance of services. The reason we are talking about disability is that was the issue raised by the court. This will eliminate that issue and return to what had been a position where the employees were pensionable. It will return it back to a status quo, if I can say it like that.

Bruno Rodrigue, Chief, Income Security, Department of Finance Canada: It was always the government's intention that CPP contributions would be paid by the employer and the employee on these benefits. The court decision said that contributions should not be paid on those. We are clarifying the legislation to return to the policy intent to the position of the Government of Canada before the court case.

Senator Ringuette: Therefore, at the end of the private long-term disability benefit, that person could be either entitled to the CPP disability or retirement benefit.

Mr. Rodrigue: Disability benefit or retirement benefit, yes.

Senator Ringuette: That is why we are also looking at four years. The program requests that it is within four years.

Senator Peterson: By making this retroactive, there is no additional financial obligation of the federal government. Is that what you are saying? The employer is not able to claw back. Were you able to stop that, or is that what this does?

Mr. Cuthbert: Just so I understand the question, you say ``claw back''?

Senator Peterson: They go back four years and take these contributions back.

Mr. Cuthbert: You mean ask for a refund. Yes, that would stop that.

Senator Peterson: Is that another clerical correction clause?

Mr. Cuthbert: It is as a result of the Federal Court of Appeal.

The Chair: He means not as a result of the budget of last spring.

Are there any other questions? Seeing none, I thank you very much. I appreciate your spending this evening and yesterday morning with us, but it was worth it for us.

Next is Part 16, the Jobs and Economic Growth Act.

Are you all by yourself, Ms. Stevens?

Mary Anne Stevens, Director, Policy and Legislation (Values and Ethics), Treasury Board of Canada Secretariat: I am.

The Chair: You have the floor.

Ms. Stevens: These two clauses are technical amendments. They do not make any substantive change to the Public Servants Disclosure Protection Act. They are technical amendments to the Jobs and Economic Growth Act to replace two references to the Treasury Board Secretariat, with references to the Chief Human Resources Officer. It is because in last year's Jobs and Economic Growth Act, references to the public service human resources agency were replaced with references to the Treasury Board Secretariat, when they should have been replaced with references to the Office of the Chief Human Resources Officer.

The Chair: We are still thinking about what you had to say.

Ms. Stevens: I can keep talking while you are thinking.

The Chair: You can appreciate that we are dealing with a lot of parts and sections here, one after the other. This technical amendment was brought about for what reason?

Ms. Stevens: When the Public Servants Disclosure Protection Act was first enacted, the references were to the public service human resources agency. That agency no longer exists. It has been replaced with the Office of the Chief Human Resources Officer, which is a part of the Treasury Board Secretariat. Amendments were made in the Jobs and Economic Growth Act to replace the references to the public service human resources agency, but in some of those amendments, the amendments should have been to the Office of the Chief Human Resources Officer, not to the Treasury Board Secretariat.

The Chair: Someone is sitting around going through all of this saying, ``You know, what amendments have we made and what amendments should we be making?'' He or she then sends those off to whoever puts this together and says, ``Let us put those in here.'' How does this come about that you found out that these amendments should be made?

Ms. Stevens: I have no information on that, senator.

The Chair: The reason it is important for us, and honourable senators know this story, is that a few years ago this committee dealt with a bill like this, and one of the very last clauses made a provision that no longer would Parliament have the opportunity to review borrowing by the Department of Finance. That is something that Parliament had done for 200 years. It was just a small little clause at the back end of one of these documents. That is what we are looking for, to make sure there are no more of those. That is one we have not been able to reverse in the last three or four years.

Do you understand why we are going through these in the detail that we are? Senator Ringuette would like to have some clarification.

Ms. Stevens: I fully support the democratic process.

Senator Ringuette: For the purpose of clarification, this person assuming the position of Chief Human Resources Officer, would that position be within the Treasury Board?

Ms. Stevens: It is, yes.

Senator Ringuette: Does that position supersede the supervision of the public service from PCO? No? Someone in the back is saying no.

Ms. Stevens: No. The Chief Human Resources Officer is responsible for human resources administration within the public service.

Senator Ringuette: How would that person relate to Ms. Barrados, who is the public service commissioner?

Ms. Stevens: Those are very different positions. You are correct. Ms. Barrados is the President of the Public Service Commission, and they deal with staffing. The Office of the Chief Human Resources Officer deals with compensation, labour relations and pensions.

Senator Ringuette: They are the negotiating arm of the public service.

Ms. Stevens: Yes, and all other aspects of human resources.

Senator Ringuette: That was created in 2005, I think, or 2006?

Ms. Stevens: It was 2006, I believe.

Senator Peterson: Is there no financial implication for this clarification?

Ms. Stevens: Absolutely none.

The Chair: Ms. Stevens, thank you very much for assuring us there are no financial implications. Thank you for being here.

Now we will go to Part 17, Department of Veterans Affairs Act. We have with us Ms. Burke, Veterans Affairs Canada; Ms. Hayes, Veterans Affairs Canada and Mr. Rodrigue again. Good to have you back and welcome.

We are dealing with Part 17, Department of Veterans Affairs and the amendments here. What are you hoping to achieve and why is this necessary?

Janice Burke, Acting Director, Program Policy Directorate, Veterans Affairs Canada: Thank you, senator. Good evening. Part 17 of the bill contains two amendments to the Department of Veterans Affairs Act. Our first amendment, clause 179, provides a definition of ``dependent'' in the act. The addition is the result of a concern raised by the Standing Joint Committee on the Scrutiny of Regulations regarding the interpretation of the term in the Department of Veterans Affairs Act, which is the act that sets out the mandate as serving veteran, their dependents and survivors. Veterans Affairs has always interpreted the term to include individuals in a mutually dependent relationship with the veteran, such as primary caregivers residing in the veteran's home or their spouses who work outside the home. However, the committee's interpretation was narrower, including only those who are wholly financially dependent on the veteran.

Given the department has always interpreted its mandate to include these individuals, adding the definition will allow us to continue to provide benefits to these people.

Our second amendment is clause 180 of the bill. It amends section 5(c) of the act to provide authority to make regulations respecting the provision of care or treatment in non-institutionalized settings. As currently drafted, section 5(c) provides authority to make regulations respecting the provision of care or treatment at a hospital, home or other institution. The Department of Justice had expressed concerns that, as currently drafted, it is uncertain whether the act provides authorities to make regulations with respect to providing benefits outside an institutional setting, such as a private home. This change will address that concern.

In summary, these amendments will not result in any changes to programs, will have no funding implications and will have no impact on veterans and their families. They will simply ensure that the department has the appropriate legislative authority to continue to provide existing care and benefits.

The Chair: In the last comment you made, you indicated that the amendments are being made because benefits provided to someone who is staying in the home may not be covered. However, the clause reads, ``respecting the care, treatment . . . to be provided.'' Surely, care and treatment includes care and treatment in the home. We are adding ``or other benefits.''

Ms. Burke: You are absolutely right, and that had been our interpretation. It will make it absolutely clear that we continue to provide those benefits into the home to the veteran. For example we have the Veterans Independence Program benefits, which we currently provide in the homes of veterans and delays institutionalization,

The Chair: Someone interpreted ``care'' as not including the Veterans Independence Program benefits?

Ms. Burke: They wanted to be absolutely clear that we could provide this kind of care in a setting outside the home, such as a long-term care or hospital setting.

The Chair: Thank you. That is a very good program, and we want to make sure there is no confusion about it.

Senator Nancy Ruth: I wish to clarify this part. The definition will include wives who are working and earning and are not necessarily financially dependent on the veteran. Yes or no?

Ms. Burke: Yes.

The Chair: That is the answer she wanted.

Senator Callbeck: The reference to hospital, home and institution is removed. Why is that?

Ms. Burke: Basically, what is provided combines two sections of the current Department of Veterans Affairs Act. It simplifies it and makes it clear that care, treatment and other benefits, like VIP benefits, can be provided in homes, institutions or a principal residential of a veteran. It is to basically update our existing legislation to keep with the current times. We know that care can be provided in various settings for veterans.

The Chair: Thank you, and keep up the good work. We appreciate what Veterans Affairs Canada is doing.

Ms. Burke: Thank you very much.

The Chair: Part 18 appears at page 206 of the bill and deals with a proposed amendment to the Canada Elections Act. I will ask Mr. Lynch to proceed.

Matthew Lynch, Director, Democratic Reform, Privy Council Office: Part 18 of the budget implementation bill would implement the government's budget commitment to phase out the quarterly allowance to political parties over three years. Registered parties are currently eligible to receive an annual allowance, paid quarterly, of $2.04 per vote, provided they received 2 per cent of the vote cast nationally or 5 per cent of the vote in ridings where they endorsed the candidates. Part 18 of the bill would gradually reduce the amount payable in incremental reductions of $0.51 over three years. Under clause 181 of the bill, the allowance would be reduced to $1.53 per vote beginning in April 2012 for that fiscal year, to $1.02 per vote April 2013 to March 2014, and to $0.51 from April 2014 to March 2015. It would be phased out as of April 1, 2015. Under clause 182, this provision would come into force on April 1, 2012, if the bill is passed by Parliament.

The Chair: This proposed legislation falls under Keeping Canada's Economy and Jobs Growing Act and the reduction of reimbursement of funds per vote to political parties. It is a policy decision. Colleagues, we cannot argue with a policy decision as much as we might want to. Do you need clarification? Are you sure this proposed legislation will achieve this effect?

Senator Peterson: How much does this come to in dollars?

Mr. Lynch: By 2016, it would be approximately $30 million per year in savings.

Senator Peterson: That would keep the economy and jobs going, would it?

The Chair: We know what you are doing. We know what this proposed legislation is purporting to do. We thank you for being here in case there were any questions. There appear not to be any.

Mr. Lynch: I am happy to assist.

The Chair: On to Part 19, the Special Retirement Arrangements Act. We are aware that the SRAA was part of a package of statutory changes dealing with public service pensions passed in Parliament in 1992. Ms. Small and Ms. Arnold are here to help us with why it was necessary to make changes to this legislation at this time.

Joan Arnold, Senior Director, Legislation, Authorities and Litigation Management, Treasury Board of Canada Secretariat: The first amendment is in response to a concern from the Standing Joint Committee on the Scrutiny of Regulations. They did not feel that the wording of the SRAA as it stands was robust enough to support the regulations made under the act. We are proposing this amendment to fix that particular situation so that the existing regulations will be properly authorized in the opinion of the joint committee.

The Chair: As a result of that, we have proposed legislation that is deemed to be coming into force.

Ms. Arnold: I mentioned only the first amendment.

The second amendment comes into force retroactively. It is very similar to the Nordion situation. There was an oversight in the coming into force order in 1994. The daters got a little mixed up and the regulations were brought into force prior to the act having been brought into force. The Department of Justice subsequently advised us that it was something they thought should not happen. They advised us to move to amend this and make an amendment that would allow the regulations to be properly validated at this time.

The Chair: Who discovered this? How did this come about? Was it a court case?

Ms. Arnold: No, there was not a court case. The Department of Justice Canada discovered it.

The Chair: They have people up there just flipping through paperwork and looking back to 1994.

Ms. Arnold: No, not really. Amendments were made to these regulations, which were done in 1994, after that date. It was not apparent to the Department of Justice Canada that the act had not been brought into force a day before the regulations. In fact, it was the other way around. The act was brought into force on December 16 and the regulations were made on December 15. Therefore it had to be flipped around and because there is a provision in this act that says that the act must come into force a day before the regulations. We had to move it two days, from December 16 to December 14.

The Chair: I can see why you would want this amendment. It is good to get that cleaned up.

Ms. Arnold: Yes, we are happy to have it cleaned up.

The Chair: In this budget implementation bill.

Senator Ringuette: Why do you not just call this the cleaning up act and have one once a year instead of having it in a budget? That is a personal comment.

The Chair: Did you answer Senator Peterson's standing question, namely, will this cost us more from the public purse?

Ms. Arnold: No, it will not.

The Chair: Ms. Small, do you have any comments?

Mariane Small, Senior Advisor, Pensions Legislation Department, Treasury Board of Canada Secretariat: No, I do not. I have nothing more to add.

The Chair: Seeing no other questions, then we will thank each of you very much. You will take back our comments and our appreciation for the diligence of finding this back that far.

Part 20 is the Motor Vehicle Safety Act.

Mr. Ram, are you the man to talk to us about the Motor Vehicle Safety Act?

Kash Ram, Director General, Road Safety and Motor Vehicle Regulation, Transport Canada: Yes. I am here with my colleague Kim Benjamin as well, Linda Wilson, our counsel, and Mr. Eric Cragg.

The Chair: Mr. Ram, you have the floor, sir. Explain to us Part 20 and why you need it.

Mr. Ram: Under the current Motor Vehicle Safety Act regulations, non-residents, for example American citizens, can bring a rental vehicle into Canada; Canadian residents cannot do the same. The inability of Canadian residents to bring rental vehicles into Canada has been a long-standing irritant. The Yukon government, in particular, has been active on this front. They have stated that the prohibition is detrimental to the territory's tourism agency. Various individual Canadian residents and citizens have also complained to the government about the inability to bring U.S. rental vehicles into Canada.

The proposed changes to the Motor Vehicle Safety Act will allow Canadian residents to temporarily import U.S. rental vehicles for non-commercial purposes into Canada for a period of 30 days or less or any other prescribed period.

Based on our consultations with the Canadian association that represents rental companies, this should not be an issue. They do not see it as having a major impact on them. It will be a fairly limited number of rentals of this nature.

That would be the summary. We look forward to your questions.

The Chair: Thank you.

Senator Runciman: How long has this restriction been in place?

Mr. Ram: The restriction has been in place since the 1970s.

Senator Runciman: What was the rationale?

Mr. Ram: I am not aware of the rationale, but it was before free trade and different regimes existed.

Senator Runciman: Times have changed and this was just caught recently. I am sure Yukon has been expressing concern about this for a period of time as well. Have there been any other Canadian jurisdictions that had concerns about this?

Mr. Ram: Not individual provinces per se, but a number of individual Canadians, on a periodic basis, have stated that their vacation plans have been disrupted from across Canada; people travelling close to the border back and forth.

Senator Runciman: I am curious because I thought about doing this myself. I live on the border and I thought about flying into Syracuse, renting a car from National, for example, and dropping it off at a Canadian National dealer. I would have been stopped at the border and I would not have been able to drop the car off?

Mr. Ram: That is right; you would not have been allowed in.

Senator Runciman: That is good change. Thank you.

The Chair: You got one vote for this one anyway.

Senator Ringuette: How will the limit of 30 days be enforced? Is there any mechanism to enforce that?

Mr. Ram: Typically, the individual would have to return the vehicle to the point at which he or she rented it in the U.S. There are enforcement mechanisms in the act and they would be invoked, as needed. The individual can also, depending on the arrangement with the rental agency in the U.S., choose to drop that vehicle off in Canada, provided the rental agency agrees to take care of returning the vehicle within the 30-day period.

Senator Ringuette: Will there be a clear difference between a rented vehicle and a leased vehicle?

Mr. Ram: Yes. This would only cover rental vehicles. Typically, rental agreements are as long as four weeks.

Kim Benjamin, Director, Road Safety Programs, Transport Canada: The Car Rental Association said that generally the longer rate for the rental period would be 28 days. They suggested the 30-day period would be sufficient for the rental period and, if necessary, the return period.

Senator Callbeck: On the 30 days, it says here ``with a period of 30, days or any other prescribed period.'' Under what circumstances would a period other than 30 days be prescribed?

Mr. Ram: Typically, that is a mechanism that would allow us to make regulations to adjust the period other than 30 days. It could be, by regulation, reduced or increased as needed. We believe, based on due diligence, that it is unlikely that a rental agreement would extend past 28 days.

The Chair: As I understand the legislation now, an American can bring a rental vehicle across into Canada, but a Canadian who might be down in the U.S. and wants to bring a rental vehicle back across the border to Canada cannot do so?

Mr. Ram: That is correct.

The Chair: We are going to rectify that, are we?

Mr. Ram: Yes.

The Chair: Is the 30-day period a reciprocity thing? What is the reverse in the U.S., for an American who comes up here and wants to take a rental car back to the U.S.?

Mr. Ram: We are not aware that they have a limit. In our case, it is based on the due diligence that we have done with the association that represents the 180 car rental companies in Canada. This would seem to be a reasonable time, representing the needs of most Canadians who would rent a vehicle for tourism purposes.

The Chair: We are putting 30 days in statutorily but giving the minister an opportunity, through regulation, to change that if she decides that it should be changed through experience in the past?

Mr. Ram: Yes, sir.

The Chair: Thank you. I think we understand it. We appreciate that very much.

We could not give you a legal question, Ms. Wilson, but we are glad that you were here. Thank you, Mr. Cragg.

My records indicate that we are at Part 21 of 22. Next is the Federal-Provincial Fiscal Arrangements Act. Would that be equalization payments and that type of thing?

Pierre Mercille, Senior Legislative Chief, Sales Tax Division, Department of Finance Canada: Part 21 of this bill proposes two amendments to Part III.1 of the Federal-Provincial Fiscal Arrangements Act. Part III.1 of that act provides the legislative framework for sales tax agreements entered into between the Government of Canada and certain provinces. These amendments deal exclusively with the ministerial authority to make payments to the province under such agreements.

The amendments are being proposed to clarify an ambiguity in the wording of section 8.4 of that act in respect of which minister, on behalf of the Government of Canada, is authorized to make payments to provinces under sales tax agreements.

In practical matters, the proposed amendment would clarify that the appropriate minister is authorized to make payments that fall within the scope of sales tax agreements. The appropriate minister would be the Minister of Finance or the Minister of National Revenue, depending on the nature and the circumstances of the payment.

This does not affect the obligation of Canada to make the payment; it only affects which minister directs the payment.

The Chair: Surely, that is a whole lot of clarification, ``the minister'' or ``the appropriate minister.''

Mr. Mercille: If you read the wording of the previous section, ``the federal Minister . . . pursuant to the agreement, is responsible for the administration and enforcement of the system of taxation contemplated under the agreement . . . .''

The ambiguity is under the sales tax agreement, where there are currently two ministers making payments, not just one. By replacing the wording with ``the appropriate minister,'' when it is a payment that the Minister of National Revenue usually makes, he would be entitled to do so. When it is a payment that the Minister of Finance usually makes, the Minister of Finance is authorized to do so. It only clarifies an ambiguity.

The second amendment is for greater certainty. It is to ratify and confirm the past payments made under this section. There has been agreement since 1997. There are many payments being made, and it is just confirming those payments. These are clauses 187 and 188 of the bill.

The Chair: I understand what you are trying to do. I have made my point as to whether you should or should not, but off we go.

Senator Ringuette: Would this also apply to the excise tax on gas tax to municipalities?

Mr. Mercille: No. These are sales tax agreements, the HST basically.

Senator Peterson: Is there any financial implication of this? It is just for clarity. Is that correct?

Mr. Mercille: It deals with which minister directs the payment. The payments do not change. They will be made in the future with ongoing agreement. It does not affect the amount of the payment.

The Chair: Senator Peterson, the problem was, when the word ``minister'' was used, it could have been one of two ministers and there could be double payment going to the provinces. Is that it, Mr. Mercille?

Mr. Mercille: That is it.

The Chair: Thank you for staying to clarify this.

Mr. Mercille: You are welcome.

The Chair: The final part is Part 22 at page 210. It deals with the Department of Human Resources and Skills Development Act.

We are wondering how the chief of that department would deal with that lady we learned about a short while ago, who was the human resources chief in the Treasury Board Secretariat.

Mr. Bess and Mr. Hodgson, please go ahead.

Irwin Bess, Acting Senior Director, Policy Analysis and Initiatives, Human Resources and Skills Development Canada: The purpose of Part 22 is to amend the Department of Human Resources and Skills Development Act to modify the residency requirements for the Canada Employment Insurance Commissioners.

Currently, the provisions of the HRSD Act require that the Canada EI Commissioners reside in the National Capital Region or be within reasonable commuting distance. Part 22 will amend subsection 27(2) of the Department of Human Resources and Skills Development Act to remove the residency requirement for the Employment Insurance Commissioner for Employers as well as the Employment Insurance Commissioner for Workers.

Senator Ringuette: I guess my spin for the last five years to remove geographic barriers is paying off, then?

Mr. Bess: The commissioners' responsibilities normally do not require they reside locally. They do a substantial amount of their business through video conferencing and teleconferencing. They spend a significant amount of their time meeting with their stakeholders and carrying on their work on behalf of the commission.

Senator Peterson: These are not full-time positions then, are they?

Mr. Bess: No, they are not. They may spend a substantial amount of their time at the job, but it is not a full-time position, no.

The Chair: You were here when we were dealing with the Jobs and Economic Growth Act amendments, and the witness indicated that the Chief Human Resources Officer appointed under the Financial Administration Act was housed at Treasury Board.

Mark Hodgson, Senior Policy Analyst, Labour Markets, Employment and Learning, Department of Finance Canada: That is correct. That is my understanding of the Chief Human Resources Officer. These are Canada Employment Insurance Commissioners, and they fall under the Department of Human Resources and Skills Development.

The Chair: Why is the Chief Human Resources Officer not with the human resources department?

Mr. Hodgson: I would guess because that function is responsible for the human resource policies of the government for federal government employees, whereas the EI Commissioners represent employers and workers across Canada who pay EI premiums. That program falls within the department of HRSDC.

The Chair: Yes, but do they also deal with public service human resource issues?

Mr. Hodgson: No, they do not.

The Chair: Not at all?

Mr. Hodgson: No.

The Chair: That is why they are housed in the other department. That answers my question.

Thank you very much, Mr. Bess and Mr. Hodgson. We appreciate you very much staying to the very end.

Senator Nancy Ruth will be a postscript to my comments.

Senator Nancy Ruth: Just because you are both in policy analysis, I hate the word ``chairperson'' or ``vice-chairperson'' or whatever you use. I will give you my little history lesson on the ``chair.''

You will well remember the ``chair'' in Alexandria in which the learned sat in the chair and the students sat at the chair's feet. Then, of course, you get to the industrial resolution and you get a little racism, so you throw in ``chairman.'' Then you get the feminist movement, so you throw in ``chairperson.''

The word is ``chair'' and historically always has been ``chair'' in the English language, and I would like you two policy analysts to inform everybody in your bloody department to change it back. Postscript done.

Senator Ringuette: That is another 600-page budget bill you are asking for.

Mr. Bess: On a point of clarity, I believe the commissioners are on a full-time basis. I just wanted to clarify that the bulk of their work is full time.

Senator Peterson: However, they had to be from the National Capital Region?

Mr. Bess: Correct. The residency requirement is they no longer have to be resident within commuting distance of the National Capital Region.

The Chair: Thank you very much, Mr. Bess and Mr. Hodgson. We appreciate you staying this late on the second day of our hearings on this matter. With your help, we have made it through.

Honourable senators, we have in fact made it through. The rest of this is annex and schedules. Our next scheduled meeting is next Tuesday morning. Until then, have a good weekend.

(The committee adjourned.)